loan origination overview support manual - eprmg.net · government loans loan origination overview....

Loan Origination Overview

Introduction:

In this training material and supplemental training exercises, we explore theitems necessary to originate a loan. We will step by step walk you throughthe general processes and required procedures. The information containedhere is meant to be a basic guide for each and every loan originated.


Topics covered in this training:

1. Basis Point (bps)2. Types of Mortgages3. Roles and responsibilities of the Loan Officer, Processor and Underwriter4. Loan Application 1003

1. Taking a Complete Loan Application2. Adding a Co-Mortgagor3. Ordering Credit4. Reviewing the Credit Report5. Matching Liabilities

5. Mortgage Pricing a Loan & Lock Change Requests6. Automated Underwriting7. Qualifying Ratio Definitions



Basis Point (bps):

Unit of measure for interest rates and other percentages in finance. A basis point is 1/100th of 1% or 0.01%

Basis Points (bps) Percentage Terms

1 0.01%

10 0.1%

50 0.5%

100 1%

1000 10%

10000 100%


Basis Point (bps):

Mortgage rates are offered in eighths (1/8th)

Decimal Percentage Eighths Basis Point (bps)

0.00125 .125% 1/8 12.5 bps

0.0025 .25% 2/8 = 1/4 25 bps

0.00375 .375% 3/8 37.5 bps

0.0050 .50% 4/8 = 1/2 50 bps

0.00625 .625% 5/8 62.5 bps

0.0075 .75% 6/8 = 3/4 75 bps

0.00875 .875% 7/8 87.5 bps

0.01 1.00% 8/8 = 1 100 bps

Decimal Percentage Eighths Basis Point (bps)

0.03875 3.875% 3 7/8ths 387.5 bpsSample Rate: 3.875%

Types of Mortgage Loans:

Mortgage Types

Conventional Loans

High Balance LoansJumbo Portfolio Loans

Conforming LoansConforming High Balance

Fixed RateARMS

Interest Only

FHA InsuredVA Guaranteed

USDA/Rural Housing

Government Loans



Labeling Documentation:


Basic Roles and Responsibilities:

Loan Officer

• Completes initial 1003

• Collects income and asset docs

• Orders initial credit report

• Structures loan

• Runs initial AUS findings

• Prequalifies borrower

• Completes initial disclosures

Processor

• Collects documentation requests from LO or borrower

• Reviews loan file for accuracy

• Validates AUS findings from supporting documentation

• Order outs – title, escrow, insurance and appraisal order

• Obtains necessary verifications

• Reviews approvals and needed conditions

• Schedules loan closing

• Maintains communication between parties

Underwriter

• Underwrites loan to guidelines

• Communicates conditions or Loan Officer and Processor

• Conditions signoff where applicable

• Loans decisioning i.e. suspense, approval, denial and sends decision denial

• Issues clear to close

• Determines both prior to closing and closing conditions


Creating a New Loan:

1. Select the Pipeline view tab and change the loan folder to Prospects

2. Click the document icon with the green +

3. You will be prompted to select a New Loan template from the template set• TBD template for Pre-approvals

(“TBD can be processed on “Purchase” template)

• Retail Purchase loan template is for a purchase where the property address is determined

• Retail Refinance Loan is for a residential refinance

4. Click Select Template


Borrower Summary:

• Channel is always Banked – Retail

1. Please complete the borrower summary first

2. Information entered into the borrower summary will be automatically entered into the corresponding pages of the 1003


Borrower Information:

• Borrower and Co-Borrower information goes in the borrower information area

1. If there is no Co-Borrower check the No co-applicant checkbox

2. To add additional Borrowers on the loan who are not married you will need click into the manage borrowers screen to add them

3. Note: When pulling credit you will need to pull credit for every borrower or borrower pair on the file


Social Security Number Verification:

• Please do not edit any information on this portion of the 1003. The information is prepopulated from the loan creation template


Present Address:

• If the borrowers have lived at the same address for the past 2 years, the present address is the only address required

• In the event the borrowers have lived at more than 1 address in the past 2 years the previous address information must be entered for all borrowers

• Enter the number of years and months the borrowers resided at each address and determine if the property was owned or rented


Co-Mortgagor:

• Co-Mortgagors are Borrowers with separate 1003’s

1. Click the Manager Borrowersicon located toward the top left of screen

2. Click the New icon

3. Enter additional borrowers First, Middle, Last Name and SSN

4. Click Close

5. Select the Co-Mortgagor from the Borrowers dropdown menu

6. Enter all borrower specific information on each form starting with the Borrower’s Summary (PRMG), all loan details will transfer between the 1003’s


Co-Mortgagor:

• Enter all borrower specific information on each form starting with the Borrower’s Summary (PRMG), all loan details will transfer between the 1003’s


Ordering Credit:

1. Click the calendar icon for Borrower #1 and Borrower #2 (if applicable)

2. Select the date the borrower/s authorized their credit to be pulled

3. Click the Order Credit

4. When the system recognizes credit is being pulled for the first time you will be prompted for the credit service provider:

1. Acranet (West Coast)

2. Credit Plus (East Coast)

5. Click Submit


Ordering Credit:

1. On the credit setup screen fill in the required setup information

2. Check Save Login Information

3. Click Finish

4. Once the credit information is validated the services view tab will open to review the report. You can toggle between the loan and services view tab


Ordering Credit:

1. Toggle back to the loan tab and click Import Liabilities

2. Prior to importing liabilities make sure the delete existing liabilities and import FACTA are checked

3. Click Import

4. Liabilities will import to page 2 of the 1003

5. With the exception of married borrowers Co-Mortgagors will need to be selected and have their credit individually pulled through the drop down

6. Click the Save icon in the top right corner of the screen


Ordering Credit:

1. Once the Liabilities from the Credit Report are populated the borrower and Co-Borrower score information will populate into the loan application.

2. The Credit Reference # is the credit report ID from the vendor


Reviewing the Credit Report:

• The credit report is broken down into a few important sections:

• Score Information

• AKA(s)

• Trade Information


Reviewing the Credit Report:

• Credit Report sections continued:

• Collection Information

• Public Record Information

• Inquiries


Subject Property and Transaction Details:

• If the property is a purchase and you do not know the property address the Address will show as TBD (To Be Determined)

• Select the Units Type

• Select the Property Type

• Enter the Estimated Value

• Enter the Appraised Value

• Select the Loan Program by clicking the magnifying glass

• Do not change the default closing template


Loan Details:

• Purpose of Loan1. Purchase/Refi

1. If Purchase

1. Construction

2. Construction – Perm

3. Other

2. If Refi

1. Cash-Out

2. No Cash-Out

3. Select Refinance type

• Select Loan Type

• Select Lien Position• Is there Sub. Financing?

• Select Property Occupancy

• Enter Amortization Type


Employment Information:

• 2 years employment history is required for each borrower• If borrower is Self-Employed

check the self-employment check box

• Enter years on job in years and months

• Enter years in line of work this information will be necessary for AUS findings

• In the event the borrower has not been employed by the same employer for 2 years, additional employment history will need to be entered by clicking the Show All (VOE)


Show All (VOE/VOR) Controls:

1. Additional records can be added, deleted, moved up or down depending on need

2. For each record added please ensure the correct details are provided

3. The record details section has a scroll on the left side


Monthly Income and Combined Housing Expense Information:

1. Borrower and Co-Borrower income information is entered in section 1. By clicking the edit icon you can set the wage frequencies


3. Section 3 provides us Other Income. Determine who it belongs to select a description of the income and enter the amount

1. Supporting information regarding this income will be required


Assets:

• Click the Show All (VOD)

1. Enter bank accounts for each borrower/Co-Borrower

• Enter Other Asset information

1. Stocks and Bonds

2. Other Assets

3. Life Insurance


Schedule of Real Estate Owned:

1. Additional records can be added, deleted, moved up or down depending on need


3. The record details section has a scroll on the left side

4. After all Real Estate Owned is entered the Schedule of Real Estate Owned will total the records

5. Match


Schedule of Real Estate Owned:

• For each mortgaged property make sure the liability is matched accordingly


Declarations:

• Questions for Borrower and Co-Borrower to be answered during interview:• Y = Yes

• N = No

• Question M if answered Yes requires sub question 1 and 2 to be filled in

• Question 1• PR = Primary

• SH = Second Home

• IP = Investment Property

• Question 2:• S = Sole Ownership

• SP = Jointly with Spouse

• O = Jointly with another person


Information for Government Monitoring:

• Government Monitoring information to be filled in during interview

• Borrower has the option not to furnish information if desired


Mortgage Insurance:

• Mortgage Insurance can be accessed in the Forms Tab on 1003 Page 2

• Click the edit icon


Conventional Mortgage Insurance:

• Get a quote from the MI company

1. Type in both the percentage and months for both factors

2. Type in 78% (if not there) and click OK.

3. Place a copy of the Mortgage Insurance Quote in the eFolder for processing and Underwriting

Before After


Lender Paid Mortgage Insurance (LPMI):

• For products the MI is being paid by the lender click the Lender Paid Mortgage Insurance box

Before After


FHA Mortgage Insurance:

• FHA Loans will show the following MIP/PMI Guarantee Fee Calculation screen

• Click Get MI

• Make note of the 1.75% upfront MIP fee

• The monthly MIP rate will be determined by the Loan to Value (LTV ratio)

Before After


VA Mortgage Guarantee:

• VA Loans will show the following MIP/PMI Guarantee Fee Calculation screen

• VA Guarantee rates can be located here: Click Here based on transaction type and usage

• VA loans to not have any Monthly Mortgage Insurance

Before After

http://www.benefits.va.gov/homeloans/documents/docs/funding_fee_table.pdf


VA Mortgage Guarantee:

• If the Veteran is exempt to form VA funding fee:

• DD-214

• Box 18 Remarks

• Certificate of Eligibility

• Exempt or Non Exempt

1. Go to Forms VA 26-0286 Loan Summary and scroll to line #60

2. Select Funding Fee Exempt


USDA Guarantee:

1. Select the Guarantee Fee Percentage from the dropdown menu

2. Check the correct box for Financing Guarantee Fee

3. Type the Monthly Mortgage Insurance/USDA Annual Fee Premium

4. Click OK

Before After


Pricing a Loan:

• The Product and Pricing service will search for best fit program and pricing information for the loan. Loan information is passed directly from the 1003 to Optimal Blue, which then returns a list of loan programs the loan is prequalified for

1. Click Product and Pricing on the Borrower’s Summary (PRMG) form or from the Service tab

2. Optimal Blue – Enhanced should be on the My Providers tab if not click All Providers

3. Click Optimal Blue – Enhanced

4. Click Add to My List. The next time Product and Pricing is accessed Optimal Blue – Enhanced will be on the My Providers tab

5. Click Submit


Pricing a Loan:

• First time access Login Name and Password will need to be entered and check the Save Login Information box

• Click Continue


Pricing a Loan:

• Most all fields will auto-complete with data entered on the 1003. Review all the information for accuracy paying close attention to the FICO score for accurate pricing

• Select Property Flips

• Select # of Financed Properties

• Select No Fee Option

• Click Submit


Pricing a Loan:

• Pricing results will appear showing what programs the file is Eligible and Ineligible for click Show or the product name for the desired product


Pricing a Loan:

• Most all fields will auto-complete with data entered on the 1003. Review all the information for accuracy paying close attention to the FICO score for accurate pricing

1. Select the Lock Period (15)

2. The rate associated with the loan will be highlighted, but is not required to select that rate. Click the blue Lock icon for the desired rate, rebate, make sure to update the loan file if a different rate is chosen (16)


Pricing a Loan:

• Details of the lock will appear with the hits and adjustment figured in. there are three (3) options to choose from; click Request Lock when ready

• Printer Friendly Version (print a hard copy),

• Update Encompass (updates the file to reflect the selected rate) and/or

• Request Lock (continue with the lock process)


Pricing a Loan:

• The lock request is automatically sent to Secondary, save and close out of the loan. The Originator will receive an email with the details of the lock request. The status can also be found on the pipeline view and loan banner


Lock Change Request:

• After a loan has been locked sometimes the information provided at initial lock needs to be changed and/or updated. Following these steps to request the change/update.

1. Log into Optimal Blue by clicking Product and Pricing on the Borrower’s Summary (PRMG) form or from the Service tab

2. Select Optimal Blue – Enhanced

3. Click Submit



• Click Change Request icon



1. Select the change request type

2. Lock Extension - type in the number of days to extend by then Apply Change

3. Rate Change – Will bring up a rate selection box, choose the rate then Submit Request



• Profile Change – Type in the change into the Note section, check Email Secondary box and then click Add Note. This will put the request in the Loan Note Board and will show all requests/changes made to the lock

• Click OK on message from webpage pop-up for rate change



• An OB Change Request confirmation page will appear showing the comparison of what was previously selected to what is currently selected. If the changes are accurate and ready to proceed, click Submit

• Click OK to the pop-up that says Your change request has been submitted


Automated Underwriting:

FNMA (Fannie Mae) FHMLC (Freddie Mac)

DU LPA

VA USDA FHA

DU/LPA GUS DU

JUMBO

Manual/DU

• Which underwriting engine to I use?



• The Fannie Mae DU for ePASS service seamlessly integrates with Fannie Mae's Desktop Underwriting.

• Preliminary findings can be requested before submitting the loan to determine the borrower's ability to qualify.

• There are master DU credentials that have already been put into the system, user does not need to enter the information

1. Make note of the credit report reference number on the Borrower Summary (PRMG) form or copy it using Ctrl+C on the keyboard



1. Click Services tab

2. Click Request Underwriting

3. Select Fannie Mae DU on ePass

4. Click Submit



1. Top left side click Submit to DU on ePass

2. Click the radio button - Provide a reference number to re-issue a previously ordered credit report

3. Click Next



1. Select Paramount Residential Mortgage Group from the Institution ID dropdown menu

2. Type in the credit report agencies Account Number/Login In and Password

3. Click Submit

4. The system will retrieve the findings and bring up the Fannie Mae website from there continue as normal to achieve approved findings. A copy of the findings will automatically be sent to the Underwriting placeholder in the eFolder


Qualifying Ratios:

Loan-to-value Ratio: (LTV)Loan Amount/Lesser of Sale price or Appraised Value

Front End Ratio:PITI/Gross Monthly Income = Housing Expense Ratio

Back End Ratio:Total Debt/Gross Monthly Income = Total Debt to Income Ratio%

EndLoan Origination Overview


loan origination overview support manual - eprmg.net · government loans loan origination overview....

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